Abstract

This paper critically examines the systemic flaws in the US oil and gas regulation, and BP’s corporate governance that we argue predisposed the BP oil spill in the Gulf of Mexico’s Outer Continental Shelf. This spill resulted in possibly the worst environmental disaster in United States (US) history overseen by the compromised US Minerals Management Service (MMS), which was restructured by the Reagan Administration during 1980’s. Regulatory capitalism is a neo-liberal development based on the ideology of reducing reliance on state regulation for expected efficiencies through fundamentalist ‘free-market’ capitalist mechanisms, such as competition, unfettered markets, minimal taxes and little government intervention to grease the wheels of industry. Regulatory capitalism is ostensibly from the government, in this instance the Reagan Administration, which gave the MMS a conflicting and ultimately disastrous mandate to regulate and collect revenue from offshore oil leases. BP and other oil companies have flourished under regulatory capitalism, where self-regulated corporate governance mechanisms have been allowed to control nature’s destiny. BP Annual Reports 2004 to 2009 and Sustainability Reviews are greenwashed by a company caught up in scandals and the dirty business of oil exploration and extraction. We conclude that the problem with BP’s system of internal controls by various corporate governance subcommittees to monitor safety, health and the environment, is self regulation by a few directors with little transparency or critical review of the processes.